Select Committee on European Union First Report

Annex 2


Letter from Lord Sainsbury of Turville Parliamentary Under Secretary of State for Science, to Lord Geddes, Chairman of Sub-committee B

  Thank you for your letter of 15 November in which you provided details of your intended closing remarks in the renewable energy debate on 5 November. Having also now received notes on the points that would have been raised by Viscount Hanworth, Baroness Sharp of Guildford and Baroness Buscombe, I have extended my closing speech to cover these, and a copy of it is enclosed.

  As you know, since the debate was held the Chancellor has announced the exemption of eletricity from renewable energy from the Climate Change Levy. I have deliberately not reflected this in my speech, as I think it should stand as though delivered on the day of the debate. Similarly, we have also heard since the debate that the draft EU Fair Access Directive will not be presented to the Energy Council on 2 December and the timing of this remains uncertain.

  A copy of this letter and enclosures go to all Peers who spoke or would have spoken in the debate and to Lord Ezra (at his request). A set of these papers will also be placed in the library of the House.

  My thanks go to you and other Peers for your prompt assistance in concluding this debate.

30 November 1999


Letter from Lord Geddes, Chairman of Sub-Committee B, to Lord Sainsbury of Turville, Parliamentary Under Secretary of State for Science

  Many thanks for your letter of 11 November 1999. Indeed I very much share your sense of shock at Michael Montague's sudden death during our debate on Friday, 5 November. He had made a quite outstandingly good speech on which I was going specifically to congratulate him in my wind-up but, of course, it was not to be.

  My understanding on how events should now proceed in the context of our Debate coincides exactly with yours and I am most grateful to you for taking the trouble to write to those who were not able to speak in the debate asking them to send you notes of the points they would have made.

  In your final paragraph, you ask whether I intended to raise any additional points during my closing remarks. Apart from thanking all those who had spoken and perhaps mildly chiding one or two who had gone away from the conclusions of our Committee, I did not intend to raise any new points but rather emphasise one or two that I had already made. In particular, I wanted to reinforce our concerns regarding the lack of cohesive planning policy and again to "ridicule" the nonsense of renewables being charged any part of the climate change levy. Fortunately, that situation has been resolved by Gordon Brown in his speech last week though exactly how you were going to deal with that particular point in your speech on 5 November rather intrigues me.

  I intended, in a moment of vain glory, to quote from the speech that I made on 2 December 1974 and in particular two extracts being, from column 506:

    "significant sums should be channelled into research on alternative sources of energy, such research being motivated as much by economic as political considerations",

and from 507:

    "Can we afford to wear energy blinkers? To continue exhausting finite resources such as hydrocarbons at today's rate is surely not only stupid but suicidal. We must plan now for the 21st century . . . new sources of clean and relatively permanent energy have to be found if the world, and particularly Europe, does not want to find itself confronted with problems of such magnitude and nature that they lead necessarily to economic and social chaos".

  I hope the above may be of some assistance to you. I very much look forward to receiving a copy of your intended speech together with your replies to points raised in the Debate.

15 November 1999


Intended Speaking Notes for the Debate on Electricity from Renewables Viscount Hanworth

  This report which we are debating on a Friday afternoon at the end of a long parliamentary session, represents a seemingly modest doorway which opens onto some of the most daunting perspectives of the coming century.

  The report on Electricity from Renewables is concerned with the problem of how we should strive to reach the targets that we have set ourselves for reducing our dependence on fossil fuels.

  The Government committed itself, at the Conference on Climate Change at Kyoto in September of 1997, to a reduction in our emissions of carbon dioxide of 12.5 per cent over a period which runs from 1990 to some date within a target interval between 2008 and 2012.

  The European communities have derived some more specific targets. They have proposed that 5 per cent of their electricity should be obtained from renewable energy sources by the year 2003 and 10 per cent by the year 2010.

  Amongst other matters, the report is intent on assessing the likelihood of our meeting these EU targets. It reaches the conclusion that, unless drastic action is taken, we have no chance of attaining them.

  Our government, in the persons of the Deputy Prime Minister John Prescott and the Environment Minister Michael Meacher, played a leading role in saving the Kyoto conference from breakdown.

  They were faced with the unwillingness of some of the industrial nations, notably the United States and Japan, to commit themselves to taking any measures to reduce their emissions of carbon dioxide.

  The American negotiators were doubtful that the US congress could be prevailed upon to ratify the Kyoto protocols, given the powerful opposition of the members representing coal, oil, steel and automobile interests.

  The Third World countries, in turn, were unwilling to help in overcoming a problem that was not of their own creating, unless they were offered major inducements.

  Their negotiators protested that they were being asked to forego their own opportunities of industrial development by renouncing the use of their available energy resources. This they were refusing to do.

  The US vice president Al Gore, said the Clinton administration would not even send the treaty to the Senate unless the Third World countries agree to its terms.

  The outcome was a set of agreed emission targets to which no nation seems to be seriously committed.

  It may be worthwhile, at this point, to remind ourselves of the magnitude of the threat to the global environment. We seem to have moved very rapidly from the position where it was reasonable to doubt the reality of this threat to the present position where the inevitability of the impending disaster is virtually unquestionable.

  Since middle of the eighteenth century, which marks the beginning of the industrial revolution, the burden of atmospheric carbon dioxide has increased by 30 per cent from a level of 275 parts per million by volume to a present level which is in excess of 360 parts per million.

  The present level exceeds anything which is to be found in the Antarctic ice cores which contain a record of carbon dioxide concentrations stretching back over 220,000 years which cover two glacial maxima and three interglacial periods, including the present.

  Simple atmospheric physics would suggest that, with other things being equal, a change of this magnitude should be accompanied by a global temperature increase of 1.5 Celsius.

  The connection between carbon dioxide concentrations and global temperatures was made as long ago as the 1880s by the Swedish physicist Svante Arrhenius who calculated the changes of concentration which would be necessary to produce an Ice age.

  I shall briefly describe the likely effects of the present and the predicted future temperature changes in a moment.

  In fact, until the early 1990s we had witnessed a temperature change of only 0.7 degrees centigrade. The truth is that the matter is vastly more complicated than the simple physics would suggest.

  There are all sorts of positive and negative feedback processes to be taken into account which might serve to exacerbate or to mitigate the effects of the anthropogenic emissions of carbon dioxide.

  If one looks at the record of the Northern hemisphere temperatures of this century, one finds that, from the 1930s until the 1970s, the average temperature was actually declining quite markedly.

  The reason for this decline is somewhat ironic. It has to do with the thermal reflectivity of an increased cloud cover which was due to the presence in the atmosphere of the dust and the particulate sulphates which come from burning fossil fuels—from coal burning in particular.

  Now this temporary hiatus in the upward trend is over; and temperatures are increasing with unprecedented speed. This week, we have heard of some tentative projections of the Hadley Centre for Climatic Research which suggest that temperature may rise by as much as eight degrees over some land masses by the end of next century. This is 2.5 degrees more than previously predicted.

  Such temperature rises would set in motion some rapid processes of positive feedback. The melting of the Arctic permafrost, for example, would release to the atmosphere vast quantities of methane which are presently trapped in the tundra.

  As the report of renewables testifies in another connection, the contribution of methane to global warming is some twenty times greater than that of carbon dioxide when the two gases are compared mole for mole or volume for volume.

  In order to illustrate the effects of global warming, let me mention just one aspect. A figure which is commonly quoted for the rise in sea level consequent upon an increase in average global temperature is (25 +- 15) cm per degree Celsius. This suggests a sea level change of between 30 cm and 120 cm for a temperature rise of three degrees.

  If oceans rise too rapidly, we would simply have to abandon the inundated land and cities. It has been estimated that a sea-level rise of one metre would threaten about five million square kilometres of land, which represents about 3 per cent of the world's total land area. However, under current climatic conditions this represents a very substantial proportion (about 30 per cent) of the productive crop land, which lies mainly in river valleys and flood plains.

  The magnitude of the problem is clear, but our response is negligible. It is not hard to understand why this should be so. There are no global political organisations which are equal to the task of averting the disaster. It is pointless for any one nation to act on its own when it is fearful of the derelictions of the other nations which would be required to act in concert. Therefore, the problem is liable to be ignored and put out of mind for as long as possible.

  Governments which are new to office might be expected to address the problem with vigour and with optimism; but, within a very short while, their attitudes are liable to be tempered by the political realities.

  Do I dare to suggest that this is what has happened in the case of our own government? I should say, at least, that the suspicion has been aroused. But I am more optimistic that they will take action than it might, at first, appear.

  My reason for optimism is that I perceive that our energy policy is fundamentally unviable, even in the medium term; and I believe it is bound to be revised drastically. I would expect this to happen sooner rather than later.

  The fact is that we are dependent, as is no other European nation, on oil and gas for our primary sources of energy. Within a very short while, perhaps within the life span of a modern jumbo jet, we will be confronted with the exhaustion of our own local supplies.

  We shall need to find replacements; and, in a world of increased international tensions, we should be ill-advised to depend largely on foreign supplies. In short, we should be compelled by the political realities of our situation to seek to reduce drastically our dependence on fossil fuels.

  If this scenario is to be believed, then there can be no doubt of the importance of the Select Committee's report on the use of renewable energy sources in generating electricity. The report spells out with great clarity the various options which are available to us in seeking to replace the fossil fuels.

  The overall impression which it gives is that none of the options taken singly or in combination are capable of satisfying more than a small proportion of our present demands for energy. The limit of what they can provide is perhaps 25 per cent of our current demands.

  Clearly, either we must reduce our demands drastically or we else must look elsewhere. The conclusion which is staring us in the face is unpalatable to many of us. It is that we are bound to resort to nuclear fuels if we wish to maintain our level of energy consumption. This is surely a political reality; and the sooner we face it the better.

  It is to be hoped that we will approach the hazards of nuclear power generation and waste disposal with more honesty and more caution that hitherto. What seemed, in its early years, to be the greatest gift of twentieth century technology is likely to be seen, in future, as the doubtful benefit of a Faustian bargain which was made under duress.


Arrhenius, Svante August (h, Feb 19 1859; Wijk near Uppsala, Sweden, d. Oct 2, 1927; Stockholm) Swedish physical chemist.

House of Lords Select Committee on the European Communities, Electricity from Renewables HL paper 78-1

Letter from Baroness Sharp of Guildford to Lord Sainsbury of Turville

  I gather that it has been proposed that, rather than take up the debate on renewable electricity which we abandoned last Friday after the unfortunate collapse of Lord Montague, Baroness Buscombe and I should write to you setting out the main points we would have made in our winding-up speeches. You will then send us a joint reply which will be placed in the Library.

  I am happy with these proposals and set out below the main points I wished to raise.

  1.  As things stand, Britain is not doing enough to fulfil her Kyoto commitment to cut CO2 emissions by 2010 by 20 per cent. Indeed we shall be lucky if we meet the legally binding target of 12.5 per cent, although this should be easy given the "dash for gas" and switch from coal. We are even further off meeting the 10 per cent target for renewable electricity—currently only 2.5 per cent of electricity now comes from renewables (of which 1.5 per cent comes from old hydro) and with the ending of the NFO regime renewable capacity coming on stream will be falling. As the report stresses we need a sevenfold increase in the rate of installation now if we are to meet our obligations.

  2.  This failure is serious. Evidence mounts by the day that global warming is "for real" and is being accelerated by the rising emissions of greenhouse gases. Unless the developed world shoulders its responsibilities and makes a serious effort to cut emissions, the steady industrialisation of the developing world will accelerate this process yet further. Britain must join countries like Germany and Denmark in setting a good example. Only then can we bring pressure to bear on the US to sign up to Kyoto and do its part too.

  3.  The last ten years have seen a remarkable change in the economics of renewables. We are now looking at costs per KwH from wind-power at 2\8P; from landfill at 2\7P per KwH and from waster incineration of 2\3P per KwH. Such costs are wholly competitive with gas or coal burning power stations. Other technologies—offshore wind power; small hydro; solar; photo-voltaics; tidal stream—might well become viable if they were developed at a greater scale. As Lord Williams of Elvel stressed, for most it is a question of scale—as long as production is small scale it will be expensive, the price will be high and the demand small. The NFFO regime in the UK has given this technology a boost, but by requiring always the cheapest option picked up wind-power (where Danish government backing had pushed production over the scale threshold) and opted for the windiest land-based sites which unfortunately proved almost always to be on the tops of hills which were designated as areas of outstanding natural beauty! They don't have to be sited in such places—most are in fact a good deal better looking than the 22,000 large grid pylons currently littering our landscape.

  4.  It is not therefore difficult for Britain, if there is the political will, to meet its Kyoto and renewables targets. Given the urgency of the issue one might have expected the Government to be mounting a "Campaign for Renewables". Sadly, as the Select Committee report shows so clearly, the Government is in a shambles on this issue. There is no campaign, no strategy, no urgency. You are phasing out the NFFO regime, yet as Lord Montague had pointed out so clearly in his speech, you have left the industry in a fog of uncertainty as to what is going to happen for over a year—hardly conducive to encouraging private sector investment in this sector. The DTI Consultation Paper had clearly not explored the options or costs on renewables. (See paragraph 354 of the report, which criticises the DTI for its failure to try to cost the various options.) Whilst the DTI is supposedly trying to promote renewable energy, the DETR slaps them down with planning controls and the MOD has objected on one ground or another to two out of 10 of the schemes put forward. Now the Government are proposing to inroduce a Climate Change Levy, but imposing it on renewable energy as well as fossil fuel energy. What a catalogue of ineptitude! Where, oh where, is that joined-up government we all heard so much about three years ago?

  5.  What then would the Liberal Democrats propose?

    —  First, we would like to see a "Campaign for Renewables" with perhaps one of your "czars" in charge of it with power to cut through the departmental red tape and get things moving. The French would call it a Mobilisation Programme.

    —  Secondly, we want to see a rapid decision on the post-NFFO support mechanism so that the momentum built up under that programme is not lost. This should not always just back up the cheapest option—viz onshore wind power—but should be prepared to put resources into helping other options get over the scale barrier. The Danes and Germans, as a result of their early support for wind-power, now dominate the technology and are benefiting from exporting it to countries like Britain. There are benefits to be gained from being prepared to put patient capital into some of these new technologies.

    —  Thirdly, some way must be found of making sure that the contracts granted under NFFO 3, 4 and 5 see their way through to commissioned capacity. It will make a nonsense of the NFFO regime if the Government now turns a blind eye to the failure to commission—indeed, there is a case for considering penalties for those who have benefited from contracts but are not commissioning renewable plant.

    —  Fourthly, as in Denmark, encourage the local communities to make these investments in renewables. This technology is at its most competitive when it feeds into the local distribution network and with nimbyism so strong an issue in planning decisions there is a great deal to be said for giving local communities the incentive to make such investments and letting them sort the planning issues out for themselves. Lord Cathcart spoke of the experiments he had encouraged in the Breckland District Council and others spoke of a possible role for RDAs. Indeed, this is just the sort of project an RDA might be encouraged to develop in partnership with one of the local Electricity Supply Providers. But unless and until the Government is prepared to give the RDAs real resources (and/or power to go to the market to raise real resources) and the headroom to take initiatives of this sort, they will get nowhere.

    —  Fifthly, the regulatory framework must be right. It must be neutral as between renewables and other sources of power—which means that issues relating to embeddedness and net tariffs must be sorted out. And renewables must be given full access to the grid, even for very small contributions. We support the idea of taxing those sources of energy which impose extra costs on society through pollution, but favour a tax based on carbon emissions, not the indiscriminate Climate Change Levy proposed. A real effort needs to be made to sort out the planning issues, but ideally through involving the local community in the project.

    —  And, finally, emphasis needs to be put on energy efficiency as well as energy use. The average house in London takes four times the energy of the average house in Stockholm to heat even though Stockholm is much colder than London in winter. Conservation, as Lord Methuen reminded us, remains the largest potential source of savings and the best way to cut back on CO2 emissions. We still have 17.5 per cent VAT on insulation materials; the Energy Savings Trust needs much more support and resources if it is to do its job properly—there's a strong case, for example, for channelling some of the Climate Change Levy directly into the EST. And, again to be organised through local consortia, Combined Heat and Power schemes have considerable potential and merit incentives.

  The Liberal Democrats regard "getting the environment right" as the most important challenge facing the UK in the next 50 years. It cannot be left to the market because the externalities are too great. This means Government has to take the lead. And it has to be tackled on a global basis because unilateral action, while not useless, will not solve the problem. This means the targets we set ourselves at conferences such as Rio and Kyoto have to be honoured. At present too many countries, including the US, are ignoring these targets. But there is no excuse for Britain to renege on its targets, and we lose the right to put pressure on others if we do so. The new changes in the electricity regime now being introduced give us another opportunity to show that we mean business. Sadly, as the Government's response to the Select Committee's report illustrates so well, there is no indication that this Government recognises the seriousness of the situation or is prepared to give the lead necessary if Britain is to seize the opportunities open to us. Instead, it suggests incredible complacency about the whole situation.

  I hope you will write to say I have got it wrong and that the Government is prepared to take strong and bold action and, above all, is willing to give the leadership that this issue so badly needs. I look forward to hearing from you.

11 November 1999

Baroness Buscombe

  May I begin by congratulating my Noble friend Earl Lord Cathcart upon his excellent maiden speech.

  May I commend the valuable work undertaken by Sub-Committee B of the European Communities Committee of your Lordships House in producing this excellent report on Electricity from Renewables.

  And I congratulate my Noble friend the Lord Geddes on his Chairmanship of the Committee and for introducing this debate.

  This, for me, is a humbling experience following on from speeches made by Noble Lords with such a wealth of skills and experience in this field; and now of course we know since the beginning of this debate, that some of those most valuable, articulate skills given selflessly and quietly are to be lost from the House, a House that is the poorer for that.

  We are talking about a field which is growing in importance and needs now to be supported and nurtured not just by governments, but companies and individuals must be persuaded that energy produced from evolving, diverse sources including waste makes so much sense.

  If we are to meet the binding Kyoto targets it is necessary, as said by my Noble friend Lord Geddes, to encourage everyone to:

    —  Reduce energy consumption;

    —  Improve efficiency in both energy and use; and

    —  Increase the proportion of energy from renewable sources.

  In order to achieve real progress in all these areas there is no doubt that targets are necessary. However, the question has been asked this morning whether a target for the United Kingdom to derive 10 per cent of its electricity from renewables by 2010, whilst technically possible, is really achievable?

  We have heard that it is achievable with a sustained seven-fold increase in the average rate of installing renewable energy.

  This is frankly, a tall order and would require a dramatic change overnight in attitude, awareness, indeed excitement in energy renewables to make this happen.

  As my Noble friend the Earl Cathcart said, "it is the attitudes of those who determine the planning process that need to change."


  How do we excite those responsible, for example, for local planning policies and moreover planning inspectors who are often persuaded by local prejudice, which is not always backed up by knowledge of technological developments. There is no doubt that technology is reducing the negative impact of some energy sources on the environment and on our quality of life — reduction in noise levels of wind power is just one positive development.

  As my Noble friend Lord Geddes has made clear today, it was possible for the Committee to only touch upon important environmental issues lightly in compiling its Report. However, it is clear that careful and thoughtful consideration was given to renewable energy resources derived from non-fossil fuel sources—wind, waste and other biomass, hydro, waste, tidal, solar and geothermal.


  Many of your Lordships have referred to the importance of wind energy—its challenges and its opportunities indeed.

  In their submission to the Select Committee, the British Wind Energy Association calculated that approximately 6 per cent of 2010's anticipated electricity demand could be met by the existing wind energy industry. (Select Committee on the European Communities, Electricity from Renewables volume II, Evidence, 29 June 1999, pg 23)

    —  Visual impact—this causes the most controversy and complaint;

    —  Noise—although, as I have already said, this has in fact been much reduced by new technology;

    —  Electromagnetic Interference—if the turbine is placed between a transmitter and a receiver used in telecommunications it can reflect some of the radiation. This distorts the signal;

    —  Safety—albeit, I understand this is fairly minimal;

    —  Birds—again I believe this is minimal.

  The visual impact can be removed by offshore wind turbine plants.

  I agree with other speakers and the Select Committee (Select Committee on the European Communities, Electricity from Renewables, 29 June 1999, pg 40) that onshore and particularly offshore wind energy must be more fully developed than at present.

  I agree with the Right Reverend Prelate The Bishop of Hereford that "really offshore" is an attractive alternative, given the removal of visual impact. And, I would like to hear from the Minister today, what the Government is doing to exploit offshore wind, as a means of generating electricity, given it is important to develop a good mix of offshore and onshore energy combined with other sources?

  Yes—too controversial and too costly in the short term, as expressed by the Noble Earl Lord Stair, however, all new developments, if they are to be on a scale worthwhile are, may I suggest, bound to be controversial and bound to be costly. However, quantity and the continuing development of technology will, there is little doubt, reduce cost over a period of time.

  Controversy—that must be met by increased awareness and understanding of the need to respond to environmental changes, and our will to reduce our reliance on fossil fuels. We must also confront what the noble Lord Montague of Oxford raised today—"bureaucratic inconvenience".


  I understand that although considerable research funding for wave energy has been provided, notably by Britain in the 1980s, there are no commercial devices yet available. The principal drawback is the complexity of the devices needed to convert the oscillatory motion of waves into a steady rotary motion.

  As for:


  Like wind energy, the flow of tidal streams and marine currents can be harnessed.

  Question: The Committee suggests that those involved in tidal streams should consider with offshore wind providers the scope for sites combining their technologies. I hope that the Minister will be able to tell us today what the Government is doing to encourage this.


  With Hydro Power I note that the Committee suggests that hydroelectric power is a well-established form of renewable energy with no polluting discharges.

  Across the EU, approximately 307 TWh of hydro energy is produced from an overall capacity of 92GW. Large scale hydro plants account form 90 per cent of installed capacity. In the UK, approximately 2 per cent of electricity is generated from Hydro Electric Plants. [1]

  The World Wildlife Fund (WWF) for Nature believes that it is unlikely that large and medium scale hydro schemes will be further developed in the UK because most of the suitable sites have already been developed. It is the WWF's view that future developments are likely to be on small scale (those under 10MW).

  The Committee recommended that "the Government review the nature and operation of the planning and consent structures for small hydro proposals, with the aim of co-ordinating and streamlining the involvement of the wide range of interested bodies."[2]


  With Tidal Barrages, notwithstanding a suggestion today that the Severn Barrage be developed now. I note that the Committee recommends the Government keep this source under review.


  The energy potential of direct energy from the sun is enormous, but most uses of solar energy are from heat. Passive solar applications involve design concepts to enable buildings to make the most of the sun's light and heat, displacing electric lighting and heat generated by non-renewable sources.

  Active use of solar energy, through solar thermal technology, concentrates the sun's heat in collectors to provide hot water for domestic use, swimming pools and space heating.

  There has also been a small amount of research into solar thermal-electric technology, in which mirrors are used to concentrate the sun's heat to generate steam for electricity generating turbines.


  The Committee suggests on energy from waste: "as waste combustion and landfill gas are two sides of the same coin, we strongly encourage the development of policies which allow an integrated approach to energy from waste."[3]

  Question: What is the Government doing to encourage the burning of landfill gas to generate electricity?


  This is fairly low profile form of renewable energy and I note that the Committee "do not see how energy crops could make a signficant cost-effective contribution to renewable energy targets for 2010" (Select Committee on the European Communities, Electricity from Renewables, 29 June 1999, pg 44).

  However, I think it is important in the overall picture to note initiatives such as that referred to by The Right Reverend Prelate The Bishop of Hereford whereby local coppicing of timber contributes to local employment and a sense of pride.


  With regard to photovoltaics the Committee suggests that the contribution of photovoltaics to UK electricity supplies by 2010 is likely to be small. (Select Committee on the European Communities, Electricity from Renewables, 29 June 1999, pg 46).

  However, there are important implications for British industry—as stated by my noble friend Lord Geddes and the noble Lord Williams of Elvel. There are a number of examples of initiatives taken already including that referred to by the noble Lord Methuen of Northumbria which demonstrates that this could, with the necessary commitment and drive from the Government, working in partnership with the industry, become commercially viable. The initiative referred to by the noble Lord Berkeley, implemented by Greenpeace, clearly demonstrates some of the problems that we are up against in trying to develop renewables. I would like to refer briefly to another initiative to illustrate what can be achieved:

  My Lords, a successful bid to the Technical Foresight Panel on energy resulted in the development of a programme known as the "Scholar Programme" where 20 companies combined their expertise and knowledge to put a PV (as they are known) panel into up to 100 schools around the UK so that they could see how energy could be produced from the sun—even in the United Kingdom—and ultimately to let them sell their energy—that is, the power that they have created—to the grid.

  This was an excellent scheme to:

  1.  attain public support and;

  2.  act as a practical educational opportunity so that the next generation could understand and appreciate where energy comes from and its importance to the nation. Those that have installed PV panels in the roofs of their homes like Susan Roaf in Oxford and Tony Marmont in Leicestershire have shown that there is a real role for solar panels in the United Kingdom and an even greater role for it worldwide.

  It doesn't take an awful lot of incentive with initiatives like this so as to provide much needed power to developing countries where energy cannot be taken for granted.

  Also, by involving the young in these kinds of projects we are preparing for the time when energy supply, as it is, will no longer be as cheaply and readily available as it is today.

  Question: I should like to ask the Minister how the Government is planning to help promote the European Photovoltaics Conference, which is being held in Glasgow next year as a result of the hard work of the British Photovoltaics Association?—This represents something of a coup for the United Kingdom in developing the United Kingdom's renewable energy.

  Question: Where is the support from the Government for this important and emerging industry, which can play such a part on the global stage?

  On 31 October the Conservative Party launched a campaign called "Common Sense for the Environment Town and Country".

  As part of this campaign we pledge that we will generate more of our energy from clean and renewable sources.

  Our campaign criticises the Government's approach and I quote "Labour's interest in reducing pollution and carbon dioxide emissions is just an excuse for new stealth taxes. Their lack of sincerity is reflected by the fact that their new energy tax (or climate change levy) fails to distinguish between renewable and non-renewable sources—that is, between low emission and high emission types of power".

  Whilst noting the Government's targets it is clear that they have failed to put Britain in the forefront of this vitally important market.

  Take solar power—where is their commitment? How are they responding to the reality that new technology allows it to be viable in Britain? Germany now has a target of 100,000 solar powered buildings. The Japanese have a target of 70,000. Britain's New Labour Government—the supposed "Greenest Government in British History" has a target of just 100.

  In response to this lack of commitment we are now establishing a Commission on Renewable Energy under the chairmanship of Damian Green MP to call upon expert advice from the domestic industry, from financiers and from practitioners around the world to develop policies which would encourage greater use of renewable energy. This Commission will feed its thoughts into the policy making process to ensure that renewable energy gains its rightful place in the electricity generation mix.

  In conclusion my Lords, as my noble friend Lord Geddes said in opening this debate "| action is needed now." This was followed by the noble Lord Williams "Action on an heroic scale".

  I hope that the Minister will respond to my noble friend Lord Cranbrook's proposal for a national consensus conference to take place now—without, as he said, preconditions, in order to immediately focus upon what energy renewables are needed, where they should be placed, where they will be acceptable so this process, can as again my noble friend Lord Cranbook said so ably today "| march with the speed that is necessary."

  This need for action is not as was suggested by the Right Reverend Prelate the Bishop of Hereford "| panic driven |" it is, as the noble Lord Paul said "| about the human prospect, the improvement of the quality of human life." My Lords, it is a sensible response to the changing world in which we live.

  I commend the report to this House.

  I beg to move.

5 November 1999


Debate in the House of Lords on 5 November on Electricity from Renewables

Reply on behalf of the Government by Lord Sainsbury

  My Lords, may I thank the Committee for their excellent investigation into renewable energy. May I also congratulate Earl Cathcart on his excellent maiden speech. It exemplified everything for which speeches in this House are famous—careful analysis, practical experience and wisdom.

  The Select Committee's report highlights the important contribution which renewables can make to energy and environmental goals both within the EU as a whole, and in the UK, and the scale of the challenge we face in delivering those objectives. The report has also flagged up a number of key issues which we will need to address as part of our policy of working towards a 10 per cent renewable contribution to UK electricity supplies. In particular the Committee has drawn our attention to the planning issues, the importance of public perception and the need to develop a new support mechanism in the reformed electricity market.

  Most importantly perhaps, they remind us that the challenges of sustainable development and climate change will require a wide ranging and integrated set of policies and programmes of which renewable energy is but one element, albeit a very important one. And our environmental goals are certainly challenging, as Lady Sharp and Viscount Hanworth reminded us. We are committed to a 12.5 per cent reduction in greenhouse gases by 2012 and are looking to move towards a domestic aim of a 20 per cent reduction in carbon dioxide by 2010. These can only serve to increase the importance we shall be attaching to renewable energy in future.


  As Lord Geddes reminded us, the Committee's inquiry into renewable energy was first sparked by a draft Directive on fair access for renewables to electricity grids. This was expected in January, as the Committee launched its inquiry, but failed to materialise. The Commission tried to fill the gap by producing a working paper which considered various options and asking whether a Directive was needed. The Energy Council clearly thought it was and in May invited the Commission to come forward with concrete proposals as soon as possible.

  Although the Commission has yet to adopt a proposal, we expect that a draft Directive will be presented to the next Energy Council on 2 December. Your Lordships will be informed of the details through the normal scrutiny arrangements.


  Renewable energy has an important and growing contribution to make to secure, diverse and sustainable energy supplies and to reducing greenhouse gas emissions.

  We have set targets for this and are already on course to achieve a 5 per cent contribution to UK electricity supplies by 2003, compared to our present figure of 2.5 per cent. We are now working towards a target of meeting 10 per cent of our electricity demand from renewables as soon as possible, and hope to achieve this by 2010. I accept that industry needs certainty, but we must accept that, in this field, there is bound to be some uncertainty about the future cost of current sources of energy, about new technologies and their costs. It is not possible to be more specific over this time frame at this stage without committing the Government to open-ended financial commitments.

  The Government expects to publish its draft Climate Change programme around the turn of the year. That will include renewables. A more detailed statement of renewables policy will also follow and will set out our programme and targets.


  I totally agree with Lord Geddes that policies to promote renewable energy and take us towards our 10 per cent target need to be developed in the context of our wider economic, energy and environmental policies. As noble lords have rightly made clear, energy efficiency and conservation are key to achieving our climate change targets.

  Since coming to Office we have taken forward a raft of initiatives which will give a significant boost to renewables. Last September we announced the fifth and largest ever NFFO Order for some 260 projects and nearly 1,200 MW of capacity. Earlier this year we announced the third Scottish Renewables Order. We have reversed the downward trend in Government expenditure on research and development and launched a new initiative to support wave energy development. Spent on renewables R&D in 1998-99 was £9.7 million, rising to a budget of £18 million in 2001-02. We are pressing ahead with reforms of the energy markets and are taking forward a regional approach to planning through regional sustainable development frameworks and targets. We have published proposals for a Climate Change Levy and a major consultation paper on the further steps we may need to take and the balance of measures we should adopt to further promote renewables development. These are not woolly proposals nor—though I'm no cricketer—a woolly dead bat. The issues we are dealing with are complex. No energy source is without problems and I plead guilty to approaching these problems with care and detailed analysis.

  We are now considering the responses to our consultation paper—some 260 of them—and continue to receive representations from the key players. This consultative, democratic route, rather than a one-off consensus conference, is our preferred approach. The Committee's report is a welcome and informed contribution to this debate.


  Renewable energy use in the UK has more than doubled since 1990. The existing NFFO mechanism has been successful in creating an initial market for renewables and in driving down costs, particularly for those technologies closest to the market such as landfill gas, energy from waste, hydro and onshore wind.

  We now have just over 700MW of renewable generation installed over and above large scale hydro. To achieve the Government's two targets of 5 per cent and 10 per cent, we need to increase this to approaching 2,000MW by 2003 and perhaps by as much as a further 4,000MW between 2003 and 2010.

  The Committee was of the view, and Lord Geddes raised the point, that Government's renewable energy targets will not be met under current arrangements. The Government is, however, confident that existing NFFO Orders will enable us to meet the 2003 target. Around 3,500MW are contracted under NFFO. In answer to Lord Geddes' question, total renewable energy use increased by a little over 14 per cent between 1997 and 1998. Less than one-third of this came from all forms of hydro. Municipal solid waste and wind each increased by over 30 per cent. Landfill gas increased by over 25 per cent. Can I remind noble Lords that the NFFO-5 Order, laid only in September 1998, was the largest ever. In addition a third Scottish Order was laid early this year.

  But we recognise that maintaining the integrity of existing NFFO contracts in the reformed electricity market is key to achieving the 5 per cent target—and thus our longer term goals. In answer to my noble friend, Lord Williams, this means that the Government intends to ensure that, following the proposed separation of the supply and distribution functions of the Public Electricity Supply companies, the existing NFFO contracts between PESs and renewables generators will continue to be honoured and aims to ensure that contracts which are commercially viable now remain so under the new arrangements. We are committed to this and are discussing a number of options with those concerned. Officials met industry representatives on this very issue only this morning.


  Having said that, the 10 per cent target is, of course, ambitious and challenging and will, indeed, require a very significant increase in the rate of investment in renewables. We will need to treble our current renewable energy use. To stimulate this, the Government will be taking new powers as soon as the legislative opportunity arises. Most importantly, the powers we envisage will enable us to require the electricity industry to increase the proportion of electricity generated from renewable sources over time. It will, of course, be vital for industry and investors to take advantage of this opportunity and to rise to the challenge.

  Let me say something about the new technologies.


  The achievement of the Government's target will require a significant further contribution from onshore wind. The Committee has suggested that there should be a general planning presumption in favour of wind farms but this is not favoured by Government. Our proposal for a regional approach to planning is more likely to win popular support.


  The Government believes that offshore wind has an exciting future. It is a vital component of the Government's future strategy on renewables and will need to make a substantial contribution to future targets. To answer Lady Buscombe's point, at the moment the Government is looking into consents procedures, licensing and environmental appraisal for offshore wind farms and is discussing with industry what further R&D is needed to support offshore development. The location of offshore wind farms will reflect the suitability of particular sites, companies' wishes and the availability of the various consents. Lady Buscombe also suggests combining offshore wind and tidal stream (or marine current) technologies. Renewable energy developers are already considering the scope for combining technologies such as wave and offshore wind. However, combining technologies at a very early stage of development with those at a more advanced stage of development may not be commercially attractive and optimum siting may not always be co-incidental. We may, therefore, have to wait some time to see commercial projects of this nature.


  The Government welcomes the Committee's view that landfill gas can make a worthwhile contribution towards renewables targets. I would draw your attention, though, to the potential impact of the EC Directive on landfill which, while helping to maximise landfill gas recovery at sites, also lays down binding targets to reduce the amount of municipal waste going to landfill which, in turn, will reduce the amount of methane generated. To cover the specific points raised by Lady Buscombe, a recent study suggests that methane emissions from landfill are lower than previously estimated, and are expected to reduce until 2010, taking into account planned measures such as the EC Directive I have just mentioned. This again highlights that the potential of landfill gas as an energy source may be limited to an extent in future years. These results are being considered within the Government's sustainable energy policy.


  The Government agrees with the Committee's view that the contribution of photovoltaics to UK electricity supplies by 2010 is likely to be small. Current opportunites lie mainly in export markets while, longer term, building integrated photovoltaics may well begin to grow in the UK market but not to any great extent before 2010. In the meantime, the Government is concentrating on increasing the competitiveness of the industry and in developing the technology, information and skills needed for more widespread adoption of building integrated photovoltaics in the longer term. This Government, to answer Lady Buscombe's points, has increased R&D spending on photovoltaics from £1.1 million in 1998-99 to a budgeted £2.5 million in 2001-02; is supportive of the European Photovoltaics Conference to be held in Glasgow next year and will be providing £30,000 towards its costs.

  Photovoltaics are still very expensive compared to electricity generated from conventional sources, and also compared to other renewables such as wind and biomass. It costs £10,000 to £15,000 to put PV panels on the roof of a typical family house, and over the life of the panels this works out at a cost of 35-50p per unit, compared to the average retail price of electricity of 7-8p per unit.

  Advocates of photovoltaics argue that the electricity companies should pay domestic consumers the same price for surplus electricity which is exported to the grid as they charge customers for the electricity which they supply. This is referred to as net metering. While the Government wishes to ensure that small renewable energy generators such as generators of PV get the full value of their generation, there are technical difficulties. There is the question of imbalances and it is not obvious that for net metering, the buying and selling prices of PV-generated electricity should, uniquely, be the same. The Government is currently considering how renewables might be treated under the Utilities Bill, including the issue of net metering.


  The energy crop with the greatest potential is short-rotation coppice. Given the heavy cost of establishment (about £1,850 per hectare), farmers may be unwilling to establish these crops in preference to other subsidised agricultural activities. But costs will fall as plantings increase. At present the Forestry Commission pay a planting grant (£400 per hectare, or £600 per hectare on non set-aside land). We are considering the future need for support in the light of the Commission's White Paper on Renewable Energy Resources.


  The Government is keeping developments in tidal barrages under review but has currently categorised this as a very long term technology unlikely to be worth pursuing at the present time for economic and environmental reasons.


  The Government does not propose to tax renewables used as energy sources in their own right—for example for the production of heat.

  Many of those who responded to the Customs and Excise consultation exercise on the proposed levy thought that electricity from renewable energy should also be exempt and the Government is currently looking at this and at ways of giving further encouragement to good quality energy efficient combined heat and power schemes to reflect the potential environmental gains from such schemes. Any exemptions agreed would need to be legally robust and take account of the need for equal treatment for imported electricity. In addition the Government has proposed that £50 million should be used to promote energy efficiency and renewable energy and the Government is currently considering how this funding could be used to best effect. £50 million for this is the figure for the first year of the Climate Change Levy.


  I mentioned earlier a number of key issues explored by the Committee and would now like to focus on planning which was seen by Lord Geddes as another area lacking in clarity. This is a point of considerable controversy as Lord Judd, Lord Williams and the Bishop of Hereford made clear, and I was very interested in Earl Cathcart's, Lord Berkeley's and Lady Buscombe's comments on the planning system. Waste incinerators, tidal barrages, wind power and wave power all have problems, and the only way to move ahead is to get the support of local people. The Government is not convinced that a highly centralised, top-down approach is the right one and has instead adopted a new regional approach to renewable energy targets and planning.

  The regional sustainable development frameworks that are about to be prepared will include targets on renewable energy from each region, reflecting the contribution proposed from each renewable energy resource. In answer to the points made by my noble friends, Lady Sharp and Lord Judd, it is expected that the regional frameworks will have the support of a wide range of local stakeholders, including Regional Development Agencies, and will set the context for regional planning guidance. This regional planning guidance will include targets for the region and define both areas suitable for renewables development and criteria for site selection.

  This means that the updated regional planning guidance will inform the treatment of renewable energy projects in Local Authority development plans. This, in turn, will feed through into decisions on individual planning applications. The expectation would be that a proposal that conformed with the development plan would succeed unless material considerations dictated otherwise.

  Allied to this is the need highlighted by the Committee for much greater public awareness of the case for renewable energy. A better understanding of the benefits of renewable energy is particularly important when contemplating developments that bring local impacts if a "not in my back yard" approach is to be avoided. Sensitive siting of the developments and greater dialogue between developers, planners and the public is also important. Winning popular support for renewables is a task not to be underestimated.

  We need to remember that most of our electricity is generated from a relatively small number of large power stations, usually sited well away from centres of population. The introduction of electricity generated on a small scale locally is still a very new concept to most people and needs explanation if it is to gain broad acceptance and support.

  The acceptability to the public of renewable energy is certainly a challenge but the Government firmly believes that a partnership approach, involving regional organisations, industry and local people is not only the most democratic way forward but the most likely to be successful in reaching our national aims and targets. We have taken only the first steps in this process but work on this will start speeding up in the next few months. The Government will continue to promote public awareness of climate change issues such as through the television advertising campaign "are you doing your bit", for instance, with its strong emphasis on energy efficiency, and is considering how best to promote further awareness of renewable energy. For example, DTI is backing the Science Museum's plans for a major exhibition on energy which will feature a significant renewables element.

  The whole question of the promotion of renewable energy—whether a Campaign for Renewables, as Lady Sharp has suggested—or other means, is being considered and our plans for promotional work will be included in the Government's future renewables strategy. I am quite sure, though, that we shall not require a renewables "czar".

  I would also mention that the Government has supported a number of community renewables projects and published material to stimulate further interest in community-owned projects but interest in developing such projects has, unfortunately, been limited.


  Earl Cathcart pinpointed the Committee's proposal for a new renewable energy agency.

  I do not find the case persuasive. There is already close liaison at both Ministerial and official level, with DTI firmly in the lead in Whitehall on renewables. Renewable energy policy covers a wide range of areas including energy efficiency, energy policy, sustainable development, housing, planning, health and taxation. It would be impossible for a single agency to be able successfully to cover all these areas. And if they were brought together it would simply create another set of co-ordination problems.


  Lord Cranbrook raised the question of waste management strategy. The Government believes in an integrated waste management strategy based on Best Practicable Environmental Option for each location. It is set out in the draft waste management strategy for England and Wales A Way With Waste, published on 30 June this year. Planning guidance for waste management was set out in PPG 10 on 14 September.

  The general approach is to encourage waste minimisation and recovery, then waste recycling, then disposal. We expect a shift from landfill towards waste combustion owing to pressures on landfill sites, landfill tax and the EC Landfill Directive and I can assure Lord Cranbrook that we are very keen to use waste combustion for electricity generation and combined heat and power. At present, NFFO encourages both electricity generation and combined heat and power through separate pricing bands—the challenge for combined heat and power is to find attractive heat loads.

  On co-incineration, high-calorific wastes can usefully displace fossil fuels in some industrial processes and should be considered as an option in these cases, subject to pollution controls.


  I would like to emphasise today the Government's firm commitment to renewable energy development and promotion. We see renewable energy playing an increasingly important part in our future energy supply and a vital component of our contribution as a nation to climate change targets not only now but particularly beyond 2010.

  As the Committee pointed out, a regional approach and improved public perception of the benefits of renewables are the key to winning the much wider popular support we would like to achieve. The Government intends to devote considerable effort to these important activities and they will be moving up the agenda.

  We believe that existing policies have been successful in driving down renewable energy prices and in establishing a good foundation of installed capacity in this country. We now need to build on this foundation, working with the grain of the competitive energy markets and ensuring that renewable generation is not disadvantaged in any way in the new electricity trading arrangements.

  The new powers we propose taking will provide the legislative basis to ensure that we continue moving towards our target of supplying 10 per cent of electricity from renewable sources. These powers will also ensure that the momentum is maintained so that, even after 2010, the share of renewables can rise in response to the need to limit greenhouse gas emissions to sustainable levels. We will also ensure that existing NFFO contracts can continue in the reformed electricity market.

  Following a consultation process earlier this year, the Government expects to announce further details of its policy on renewable energy—which will have to take into account a number of broader economic, environmental and energy policies—as soon as possible.

  Finally, I would re-iterate my thanks to the Committee for their balanced and considered approach to the subject of renewable energy. I found their comments particularly helpful in taking forward Government thinking on this important topic.

Select Committee on the European Communities, Electricity from Renewables, volume II, evidence from Philip Douglas, Forum for the Future Scholar, 29 June 1999, pg 246. Back

2   Electricity from Renewables, pg 43. Back

3   Electricity from Renewables, pg 42. Back

previous page contents next page

House of Lords home page Parliament home page House of Commons home page search page enquiries

© Parliamentary copyright 1999